* The case is unanimously ordered submitted without oral argument pursuant to

Fed. R. App. P. 34(a) and 10th Cir. R. 34.1.9. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### JAN 30 1997 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

KANSAS TEACHERS CREDIT UNION, Plaintiff - Appellant, v. MUTUAL GUARANTY CORPORATION, Defendant - Appellee. No. 96-3126 (D.C. No. 94-1524-DES) (District of Kansas)

ORDER AND JUDGMENT *

Before BALDOCK , KELLY and LUCERO , Circuit Judges.
Plaintiff Kansas Teachers Credit Union (“KTCU”) app eals from summary judgment granted in favor of defendant Mutual Guara nty Corporation (“MGC”). MGC is a nonprofit entity created to insure the dep osits of its credit union members. KTCU, a Kansas credit union, became a mem ber of MGC in 1982 and withdrew from membership in 1992. At issue are fun ds KTCU deposited with- 2 -

MGC as capital contributions and special assessment s (collectively, the “deposits”). When KTCU withdrew, MGC refused to re turn the deposits, which totaled just over $430,000. To support its decisio n, MGC cited a corporate bylaw allowing it to retain 100% of a member’s deposits upon withdrawal. KTCU advances eight reasons why it is entitled to h ave its deposits returned, all revolving around the propriety or enf orceability of the corporate bylaw. The eight arguments include: (1) KTCU’s compliance with the bylaw is excused by impracticability of performance; (2) KTC U’s deposits with MGC are to be treated as KTCU’s property under Kan. Stat. A nn. § 17-2255, and must be returned; (3) the bylaw constitutes an unenforceabl e penalty; (4) MGC did not possess the power to increase the withdrawal penalty; (5) a jury could conclude that the bylaw is, as a factual issue, unreasonable ; (6) the bylaw is unenforceable against KTCU because it did not sign the bylaw amen dment; (7) the bylaw is unenforceable because KTCU was given too little not ice before the amendment became effective; and (8) a jury could conclude that the adoption and imposition of the bylaw violated the implied covenant of good faith and fair dealing. In granting summary judgment to MGC, the district court rejected each of these arguments, save the last, which apparently was not considered by the court as a separate defense to summary judgment.- 3 -

In a recent case, Central Kansas Credit Union v. Mu tual Guaranty Corp. , 102 F.3d 1097 (10th Cir. 1996), we considered the s ame issues on nearly identical facts. Central Kansas Credit Union involved an MGC member that, like KTCU, sued MGC for return of its deposits, deposits retai ned by MGC under the same bylaw challenged here. Of the eight arguments rais ed by KTCU in this appeal, seven were made and resolved in MGC’s favor in Cent ral Kansas Credit Union

. Upon reviewing the record in this case, we see no f acts that distinguish this case from Central Kansas Credit Unionor that would militate for a different result on any of the seven issues that were considered and re solved in that appeal. The only issue KTCU raises in this appeal that was not addressed in Central Kansas Credit Unionis whether a jury could reasonably find that adopt ion or application of the bylaw violated the implied coven ant of good faith and fair dealing. Under Tennessee law, which both parties a gree applies to this case, “an implied duty of good faith and fair dealing is reco gnized in every contract in its performance and enforcement.” ACG, Inc. v. Southea st Elevator, Inc. , 912 S.W.2d 163, 168 (Tenn. App. 1995). The substance o f the duty depends on the individual contract, and the court must look to the language contained in the instrument and to the intention of the parties in o rder to impose a construction of the contract that is fair and reasonable. Id . “There is an implied undertaking in every contract on the part of each party that he wi ll not intentionally or purposely- 4 -

do anything . . . which will have the effect of des troying or injuring the right of the other party to receive the fruits of the contra ct.” Winfree v. Educators Credit Union , 900 S.W.2d 285, 289 (Tenn. App. 1995) (quoting 17 Am. Jur. 2d Contracts § 256 (1964)). While the implied duty of good faith and fair deali ng applies to all contracts, it is unclear whether Tennessee would extend the duty to the performance of corporate bylaws, in which the relat ionship of the parties affected by the instrument might differ from that of parties to a simple bilateral contract. For the sake of argument, however, we assume that t he duty does extend to performance of bylaw provisions. See IBJ Schroder Bank & Trust Co. v. Resolution Trust Co. , 26 F.3d 370, 374 (2d Cir. 1994) (“‘The rules of c ontract interpretation are generally applicable to the inte rpretation of bylaws.’” (quoting 8 Fletcher Cyc. Corp. § 4195 (rev. 1982))), cert. den ied , 115 S. Ct. 1355 (1995); Unigroup v. O’Rourke Storage & Transfer , 980 F.2d 1217, 1221 (8th Cir. 1992) (noting that Missouri law “specifically implies a d uty of good faith and fair dealing in every contract or by-law provision”). W e conclude that MGC did not act in bad faith in implementing the express provis ions of the bylaw. By retaining KTCU’s deposits, MGC did not injure th e right of KTCU “to receive the fruits of the [insurance arrangement].” KTCU’s complaint is that the bylaw, with its 100% forfeiture provision, acted to “lock in” its membership.- 5 -

Appellant’s Br. at 41. This court has already cons idered the propriety of MGC’s motive and has held that under the circumstances fa cing the thrift industry and MGC it was reasonable as a matter of law to adopt a nd use the bylaw to strengthen the association. Central Kansas Credit Union , 102 F.3d at 1109-10. The expected fruits of KTCU’s relationship with MGC was the protection of the credit union’s assets. The bylaw, far from injurin g or destroying KTCU’s rights, in fact helped to effectuate them. Moreover, we ar e unwilling to rewrite what both parties agree is an express and unambiguous by law right via the rubric of the implied duty of good faith and fair dealing: “[i]t does not follow that acting according to the terms of the by-law is a breach of good faith and fair dealing.” Unigroup , 980 F.2d at 1221. By applying the forfeiture byl aw upon KTCU’s withdrawal—as it had upon the withdrawal of other c redit unions—MGC did no more than the bylaws expressly allowed, and its act ions did not violate any duty of good faith and fair dealing in its relationship with KTCU. For the foregoing reasons, the judgment of the dist rict court is AFFIRMED

. ENTERED FOR THE COURT

Carlos F. Lucero Circuit Judge